JJB Sports shares dive on cash call
JJB SPORTS yesterday suffered a 25 per cent plunge in its share price to 23p after investors were rattled by a confirmation of a £50m rights issue and a controversial row involving executive chairman Sir David Jones.
The ailing sportswear chain yesterday said it is looking to raise working capital in a placing and open offer of shares at around 12p each – a 61 per cent discount to Friday’s closing price of 30.75p.
Meanwhile, allegations emerged that Jones borrowed £1.5m from Mike Ashley, the billionaire boss of arch-rival Sports Direct.
The financial arrangement had not previously been disclosed, and some analysts believe the well-timed leak of the loan is Sports Direct’s attempt to derail the retailer’s fundraising plans.
However, the dealings between the two have sparked investor concerns over Jones’ conflict of interests.
JJB Sports yesterday said: “Sir David emphatically denies that he asked Mike Ashley or any of the associates to lie. Sir David has no intention to leave JJB until the turnaround is complete and the damage done by the previous management is set right.”
Under Chris Ronnie, the former chief executive, JJB had run up debts of £75m to Barclays, HBOS and Kaupthing, which asked for their cash back, forcing Jones to sell off JJB’s profitable gym division.
JJB yesterday said that its board was told about Ashley’s loan but that there was no legal requirement to tell the market.